At a time when traditional retailers are shuttering thousands of stores, the e-commerce giant 1-800-Flowers.com is expanding its network of brick and mortar locations.
The company plans to expand its local presence from just one franchisee-owned retail store in Melrose to as many as 11 sprinkled throughout Greater Boston. Franchisees also operate two fulfillment centers in Needham and Woburn.
Boston is one of 10 US markets in which the company intends to add stores. The 1-800-Flowers development team met with potential franchisee operators this week and expects the first of the new local stores to pop up within six months.
“We’re very excited about the appetite and enthusiasm,” said James Franks, vice president of franchise development at the Carle Place, N.Y., company. “Boston is one of the top 10 markets in the country. We have a wealth of customers who know us here.”
The company became one of the world’s largest florist and gift retailers by acting as a middleman between Internet customers and other florists.
Last year, 8.7 million orders were placed on the 1-800-Flowers.com website and over the phone. Those orders were funneled to and fulfilled by the company’s 225 franchise stores, nine company-owned stores, and a separate network of 7,000 independent florist and gift shops.
Internet and phone orders accounted for roughly 73 percent of the company’s $735.6 million of revenues last year. Franks said e-commerce sales are expected to continue to grow, but the company has also identified opportunities to increase its brick and mortar business.
Stores provide customers a way to pick up bouquets or gift baskets after the cut-off times for same-day deliveries on online orders. Consumers often turn to the physical stores to work with designers to create floral arrangements for weddings or events, Franks said.
Eric Beder, an equity analyst of retail and consumer products at Brean Capital in New York, said the shops, delivery trucks, and employees also provide free advertising for 1-800-Flowers.
As an e-tailer, the company has an advantage selecting new locations because it knows where its customers are located. But the franchisees also create a risk for the company, Beder said.
Consumers don’t differentiate between a company and a franchisee. If deliveries are late or wrong, that damages the reputation of the business.
“You’re betting the person you pick as a franchisee is going to represent you well as a company and provide the quality you want,” he said. “You can destroy your market share very quickly in areas where you don’t have a good franchisee.”